Brussels, 04/04/2016 (Agence Europe) - Negotiations between the Greek authorities and representatives of Greece's institutional creditors resumed in Athens on Monday 4 April in the framework of the first monitoring mission of the third Greek bailout plan. This is against a backdrop which, as our readers will have no trouble believing, is tenser than during the previous discussions.
48 hours before the return of the 'institutions' (European Commission, ECB, IMF, ESM), the site Wikileaks published internal IMF conversations which indicated that the international financial organisation was quite happy with the prospect of a Greek payment incident, in order to oblige the country under supervision to concede greater budgetary efforts. The Greek government immediately demanded explanations from the IMF.
In a letter published on Sunday 3 April, the Director General of the IMF, Christine Lagarde, reiterated that at this stage, the positions of the negotiators are poles apart. “With regard to the negotiations underway, my position is that we are still a relatively long way from having a coherent adjustment programme”. She said that “should it become necessary to reduce the budgetary objectives in order to have a chance of fully meeting them, there would be a corresponding need to carry out an additional relaxation of the debt”. As regards suggestions that the IMF is hoping to bring pressure to bear on Greece and the Europeans, the former French finance minister described these as “absurd”. Expressing her pessimism regarding the chances of making progress in the negotiations if there is no climate of mutual trust, she called on the Greek Prime Minister to guarantee the confidentiality of all internal IMF discussions in Greece.
The Greek government has on a number of occasions expressed its dissatisfaction with the IMF's demands in terms of consolidation of the public finances, which it believes were calculated on the basis of incorrect economic forecasts (EUROPE 11519). The Greek President, Prokopis Pavlopoulos, is reported to be of the opinion that the European Stability Mechanism (ESM), the permanent bailout fund of the Eurozone, will take on the role of the IMF in the framework of the third bailout plan, the Greek press agency ANA reports.
The agreement on the third Greek bailout plan calls on Athens to achieve the budgetary surplus of 3.5% of GDP in 2018 (-0.25% in 2015, 0.5% in 2016, 1.75% in 2017 and 3.5% in 2018).
When asked about the matter on Monday 4 April, the European Commission said that it was acting “fairly, in all good faith and erga omnes with a view to concluding the first monitoring mission as soon as possible whilst achieving all the targets laid down”. “We are sticking to the terms of the third bailout plan”, it stressed.
According to an optimistic hypothetical scenario, negotiations between Athens and its creditors could make a breakthrough ahead of the spring meetings of the IMF and the World Bank, to be held in Washington next week. Political confirmation of such progress could take place at the Eurogroup meeting on Thursday 21 April, to be held in Amsterdam. If no financial aid from its creditors is forthcoming, the Greek authorities would be unable to absorb a reimbursement peak of €3.5 billion to the IMF scheduled for July.
The management of the humanitarian crisis related to the mass influx of refugees to Greece is unlikely to knock the budgetary balance for six, but it certainly adds a good deal of pressure to the capacities of the Greek administration at a critical point in time.
Some reactions reached the European Parliament, which sent a delegation of MEPs to Athens last week (EUROPE 11522). The President of the Social Democrat group, Gianni Pittella (S&D, Italy), stressed that the IMF should at no time give the impression that it is acting on a political agenda, on pain of compromising its credibility. He called for a swift agreement between Greece and its creditors providing for a “realistic renegotiation of the debt” and the calculation of “reasonable budgetary objectives”. A member of the Syriza coalition in power in Greece, Dimitris Papadimoulis (GUE/NGL, Greece), has written to the President of the European Parliament, Martin Schulz, asking him to react to the latest revelations. “It is more than worrying for economic stability in Greece and in Europe that certain circles seem to be working unduly to delay the completion of the first monitoring mission, taking the view that a payment incident in Greece would lead to concessions on the part of that country, the European institutions and the member states (…) at a time when Europe is facing major challenges such as economic, migration and security crises and the referendum in the United Kingdom”, he said. (Original version in French by Mathieu Bion)